ACV at the 3rd IIPC Annual Conference

by Ming Wong, 22 Aug 2013

Last month, I visited the Said Business School in Oxford for the second time.  My first trip was two years ago to attend the Skoll World Forum on Social Entrepreneurship. The occassion this time was representing ACV at the third annual conference of the Impact Investing Policy Collaborative.

Just three weeks before our event, Prime Minister David Cameron took advantage of his G8 Presidency to introduce impact investing to the world stage as well as showcase Britain’s leadership in this growing field. At the summit, G8 leaders acknowledged that impact investing is a valuable tool for solving some of our world’s most pressing social problems and agreed to promote it by creating an enabling policy environment that can support promising innovations and help scale market-based solutions.

Britain used the opportunity to introduce Big Society Capital, the world’s first social investment bank capitalized at £600 million, a newly established social stock exchange and plans to promote impact investing using tax incentives. At the same summit, the United States also launched its National Impact Initiative to expand the use of impact investing as an element of its strategies for economic growth and global development. The American initiative includes the Global Development Innovation Ventures that aims to strengthen the impact investment pipeline by piloting, rigorously testing, and scaling cost-effective development solutions and the Small Business Investment Company Early Stage Fund with an annual commitment of US$200 million. 

Our Obligatory Group Photo

 

In short, these were exciting times for everyone involved in impact investing.  For the past several months, our team at IIPC has been working hard to draft the London Principles, a set of five broad principles intended to assist governments considering impact investing as a tool to address social objectives by offering guideposts that point to better strategy and policy development.

 Unlike previous years when I was the sole Hong Kong representative, I was joined by Kim Salkeld from the Hong Kong government. We shared Hong Kong’s latest efforts to promote social innovation and entrepreneurship through a new HK$500 million development fund as well as review some of Hong Kong's previous efforts in creating social funds.

 At the conference, we also had the opportunity to hear case studies from Senegal, Turkey, Peru, Germany, UK, India, Brazil, Ghana, Morocco, South Africa, Canada and Australia.  The candid and open discussions that followed these cases provided important lessons to help us craft and refine the London Principles.

 
 

At last year's conference in Rio, I wrote down two items that I would like to see happen in Hong Kong - the first one was the creation of a government office of social finance and innovation to coordinate government policies across all departments and the second the creation of a fund to support intermediaries.

While such an office has not yet been created, the launch of the HK$500 million development fund took place a lot quicker than everyone expected. Having said that, much remains to be done if we are to harness the power of impact investing to address our city’s well known problems like poverty, aging and housing. To fully realize the potential of our development fund, a proper office of social finance and innovation needs to be set up because social innovation and impact investing cannot take place within the narrow confines of any one government department.

 For example, tax policies need to be studied to see how more capital can be crowded-in to support social entrepreneurs whose work are just as important as those conducted by Hong Kong’s current non-governmental organizations that enjoy tax-exempt status. Financing and investing regulations need to be aligned so that social finance intermediaries can more easily provide advisory and capital raising services to start-up companies with social missions, such as those that help alleviate poverty or improve the quality of lives of our aging population, without being subject to all the rules and regulations that are intended to govern traditional banks and investment companies. Britain, for example, has exemptions that waive certain non-profit intermediaries from licensing and capital requirements.

 The importance of research needs to be better recognized. Without a proper theory of change model in place, the government will always be seen to be reacting to societal pressures whenever it attempts to introduce new policy measures. Good research though requires well-trained and dedicated researchers. In a city where philanthropists vie to put their names on donated buildings but remain less keen to support research, our government needs to take a stronger leadership role to make more research funds available.

 Finally our government needs to provide affordable and accessible working space so that investors, entrepreneurs and policy makers can more easily meet and collaborate. This last piece of the puzzle is potentially the most challenging but if we do not solve it, Hong Kong will find it difficult to join the ranks of other global cities when it comes to social finance and innovation.

 

 

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